Bankruptcy: It’s All About Timing.

11 Oct Bankruptcy: It’s All About Timing.

Exactly when a Bankruptcy petition is filed can make a big difference in your case.

There’s an old Vaudeville bit that has one comedian talking to another. The first asks: “What is the most important thing about com…” and before he can finish his question, the other comedian answers “Timing.” Ok, not very funny; but just as true about comedy as it is about filing bankruptcy. A mistake in the timing can leave you with a much more ineffective or difficult case and you otherwise might have.

In bankruptcy, there are several reasons to file the petition earlier rather than later:

1. End the annoying credit calls and letters;
2. Stop a garnishment or attachment or even a foreclosure;
3. Lock in your income for the past 6 months (avoid listing a year-end bonus on the means test (B22));
4. Start rebuilding your credit;

And there are several reasons where waiting might make the Bankruptcy more effective:

1. Avoid the preference period for that payment to mom;
2. Wait more than 90 days to avoid a presumption of fraud when you used a credit card for a luxury purchase under (523(a)(2));
3. Wait until more than 6 months have passed from receiving a Christmas bonus;
4. Wait until enough time has passed to be able to discharge some taxes;
5. Wait until enough time has passed since your last bankruptcy.

You get the idea. The exact day you file your bankruptcy petition can make quite a difference in the administration of your case. Many bankruptcies benefit or suffer because of filing a day or two early or a week late. Check with a competent bankruptcy attorney in your area to get this right. It’s simply too important to leave to chance.


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Douglas Jacobs is a California bankruptcy attorney and partner in the Chico law firm of Jacobs, Anderson, Potter & Chaplin. Since 1988, Mr. Jacobs has taught Constitutional law and Debtor-Creditor/Bankruptcy law at the Cal Northern School of Law. He has served as Dean of Students since 1994. He is a frequent lecturer on the subject of consumer bankruptcy law, and has spoken at both state and national levels.
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